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Semindia Fab is postponing its proposed 3 billion investment to set up India8217;s first chip manufacturing plant as it was unable to agree with the government on financial support to the unit8217;s shareholding. Instead, it will set up a smaller facility for assembly, testing, manufacturing and packaging of memory chips ATMC next year, and review investment plans once a more favourable policy is announced by the Centre.
Sandalwood Partners managing partner and Semindia Fab director Bob Kondamoori said: 8220;We will start with the back-end ATMC by the third quarter of 2007 to show our keenness to set up the 3 billion Fab City in Hyderabad.8221; Sandalwood Partners was one of the equity investors in the first phase of the project, and held a 5 per cent stake.
Semindia had achieved financial closure on 100 million for the first phase. On an equity base of 30 million, promoters Sandalwood Partners and Flextronics together pooled in 10 million each, Kondamoori said. 8220;Initially, we will be importing chips from Singapore and other countries and will get them tested, assembled and packaged at our facility in Hyderabad. We plan to manufacture 200 million packaged chips annually,8221; he added.
By doing so in India, buyers would get a margin of over 8 per cent on a chip. 8220;If the average cost of memory chip is around 5 globally, Semindia can offer it between 4.3 and 4.5 a chip,8221; he pointed out. The chips were for mobile phones, set-top boxes, handheld devices, consumer electronics and a number of other applications. Of the 200 million units, 100 million units would be sold in India, while the rest would be earmarked for global majors.
Semindia had already received a commitment from existing buyers for an investment of 800 million in the second phase, with AMD alone willing to invest and offer technology transfer to the facility. 8220;We have signed an agreement with AMD for tech transfer recently,8221; Kondamoor revealed.
